Asked on 04 Jul 2020
With the bank rates dropping, what do you think about putting money into MMF that are by Roboadvisors? (e.g. Stashaway Simple and EndowUS cashsmart). I understand that the projected returns are not guaranteed but not sure if i should put the money that i would need in 1-2 years for my uni into these roboadvisors or leave it in the bank? Any advice? Thanks!
Yes, you can certainly consider MMF. But you might want to keep it in a SGD denomination as you won't want currency fluctuations to erode your capital amount, assuming that you need the money in SGD.
The returns should generally be better than leaving it in a bank account that just gives a 0.05% interest rate. Yes, the returns are not guaranteed, but due to the nature of the underlying assets, the level of risk is low. Just don't expect returns like 2% and you should be fine.
MMF invests in short-term debt instruments, and they pay out earnings in the form of a dividend. The objective of these funds is stability and keeping the net asset value; not losing your investment. MMF investments are not capital guaranteed. While the chances are low, it is possible to lose money like all other investments.
Ideally, you should first maximise capital guaranteed investments such as Singlife account or Dash EasyEarn which offers higher returns before moving to risker options.
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